Auto insurance fraud costs Michigan drivers more than $220 million a year, Secretary of State Ruth Johnson announced while unveiling a set of 17 legislative and regulatory anti-fraud recommendations offered by the Fighting Auto Insurance Rip-offs (FAIR) Task.

Johnson convened the task force a year ago, following a one-day sting operation that found more than 16 percent of paper proof-of-insurance certificates submitted statewide on July 31, 2013 were fraudulent, including more than 45 percent in Van Buren, Chippewa and Sanilac counties. (See chart below.) As reporter Emily Lawler of put it:

It came about after instances of people using white out to change the years on their auto insurance certificates, selling replica insurance documents and, in one case, a fake insurance document that included a QR code linking to a website stating that “llamas are soo cool.”

Topping the task force’s recommendations is a proposal to create a state auto insurance fraud agency, similar to an idea proposed by R Street President Eli Lehrer in a November 2011 report published by michigan auto fraudthe Heartland Institute. Though the task force didn’t any specific details on how the anti-fraud agency should be structured, the Insurance Institute of Michigan has proposed a five-year pilot project to expand the existing Automobile Theft Prevention Authority, currently funded by a $1 fee on auto insurance policies, with an additional $2-per-vehicle fee to fund anti-fraud efforts. The new agency would collect data on fraud trends, consolidate insurance fraud investigations and offer training to police and prosecutors.

IIM Director Pete Kuhnmuench cited the high-cost of auto insurance in Michigan as a primary driver of the fraud, as drivers who can’t afford coverage obtain fake certificates to comply with registration requirements. The latest report from Bankrate Insurance showed Detroit with the most expensive auto insurance of any metropolitan area in the country, with rates 165 percent higher than the national average. The Michigan Assigned Claims Facility, which offers covers for the uninsured and underinsured, grew by 47 percent between 2007 and 2012, according to Johnson’s office.

Members of the task force included representatives from the Secretary of State’s office, the Michigan State Police, the Prosecuting Attorneys Association of Michigan, the Insurance Institute of Michigan, the Michigan Insurance Coalition, Property Casualty Insurers Association of America and the Michigan Association of Insurance Agents.